NEWS RELEASES
CANADA WELCOMES WTO FINANCIAL SERVICES AGREEMENT
December 12, 1997 No. 209
CANADA WELCOMES WTO FINANCIAL SERVICES AGREEMENT
Finance Minister Paul Martin and International Trade Minister Sergio Marchi today
welcomed the World Trade Organization (WTO) agreement on financial services.
The agreement, reached today in Geneva, will strengthen international trade rules
in financial services. It will be a broad, permanent agreement based on the Most
Favoured Nation principle, prohibiting discrimination among foreign providers of
financial services such as banks and insurance companies. It includes significant
market-opening commitments from a number of key countries. This agreement covers
70 countries and over 95 per cent of the global financial services market.
"This is an important agreement for Canada," said Minister Martin. "It will
provide Canadian financial services suppliers with greater certainty with respect
to their investments. As well, Canadian companies will benefit from enhanced
access to markets abroad, creating new export and job creation opportunities. The
agreement will also add increased stability and strength to financial sector
regimes worldwide."
"This agreement is a key step for the global trading system," said Minister
Marchi. "It brings financial services under the WTO's rules-based system on a
permanent basis. Canadian companies will benefit from the same access and rules in
other markets as their foreign competitors."
The ministers added that the agreement will provide a solid basis for pursuing
additional access to foreign markets in the next round of services negotiations,
which will begin by 2000.
This permanent agreement will replace an interim agreement that was reached in
1995. Governments will have until January 31, 1999, to ratify this agreement,
which is scheduled to come into effect on March 1, 1999.
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For further information, media representatives may contact:
Leslie Swartman Frank Swedlove
Office of the Minister for Director
International Trade Financial Sector
(613) 992-7332 Department of Finance
(613) 992-4679
Media Relations Office
Department of Foreign Affairs
and International Trade
(613) 995-1874
This document is also available on the Department of Foreign Affairs and
International Trade's Internet site: http://www.dfait-maeci.gc.ca
Backgrounder
In 1995, members of the World Trade Organization (WTO) adopted an interim
agreement on trade in financial services, under the framework of the General
Agreement on Trade in Services (GATS). At that time, it was also decided that
negotiations on a permanent agreement would take place in 1997. Such negotiations
commenced in April of this year.
The financial services sector is vital to the Canadian economy. Canadian financial
institutions are highly competitive internationally and have significant export
interests in North America, Europe, Asia and Latin America. The financial services
sector contributes over 5 percent of Canada's GDP and directly employs more than
500 000 people. Improved business opportunities resulting from the GATS
negotiations will lead to new business and job opportunities in Canada.
As a result of these negotiations, 70 countries have tabled offers providing
access to their financial services markets. As well, there are now permanent
multilateral rules governing trade and investment in financial services. Canadian
businesses will have more transparency and certainty regarding access to other
markets. The successful conclusion of these negotiations will help to facilitate
international trade in other sectors as well.
Canada played an active role in the negotiations, and made an important
contribution by tabling an improved offer that commits Canada to:
maintaining its existing open financial services regime;
including in its schedule the ability for foreign banks to establish in Canada
through branch offices, after implementation of the new bank branching regime; and
removing, once legislation is passed, the requirement for foreign bank
subsidiaries operating in Canada and originating from a non-NAFTA country to seek
authorization before opening additional branch offices.
Other developed countries have also tabled improvements to their offers. For
example, the United States has included the results of federal legislation
liberalizing interstate banking and interstate branching. The European Union has
removed some restrictions at the member state level. Japan's offer reflects recent
amendments to its foreign exchange and foreign trade control law, and its
insurance business law, as well as its bilateral insurance agreement with the
United States.
Among some of the improvements in the offers of developing countries are:
binding increased foreign investment limits in banking and/or insurance (e.g.,
Indonesia, Korea, Malaysia, Mexico, the Philippines);
binding an increased number of bank licences (e.g., India) or bank branches
(e.g., the Philippines);
removing some economic needs tests (e.g., Korea);
eliminating some monopolies (e.g., Brazil);
removing discriminatory capital requirements (e.g., Indonesia); and
liberalizing interest rates on deposits (e.g., Korea).
The achievement of a permanent agreement on financial services provides a base for
future negotiations in this sector during the next round of comprehensive services
negotiations, which are scheduled to begin before the year 2000.
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